TaxTMI 
TaxTMI 
2014 (11) TMI 547
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....ther cases in this group before the Income-tax Officer during assessment proceedings, etc., and also before the Hon'ble Commissioner of Income-tax, Guntur in connection with the proceedings u/s 263. 1. Upputuri Venkateswarlu 2. Gonugunta Suseela 3. Upputuri Dhanalakshmi 4. Gonugunta Srinivasa Rao I understood the orders u/s 263 of the Hon'ble Commissioner of Income-tax, Guntur dated 15-3-2013, in all the above cases, as a direction to the learned Assessing Officer to examine afresh with a full discretion to look into the applicability of the provisions of section 40A(3) in these cases. I did not, therefore, suggest appeals to the Income-tax Appellate Tribunal against the orders u/s 263 in all the above cases, and all the above assessees followed my advice. However, it is now found that the Assessing Officer, elaborately repeated the observations of the Hon'ble Commissioner of Income-tax, disallowed the entire amount u/s 40A(3), as mentioned in the orders u/s 263, giving an impression that the order u/s 263 is a direction without any discretion. After consulting seniors in the line, I could now understood that the order u/s 263 of the Commissioner of....
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....onsequential order to be passed by Assessing Officer in appeal proceedings before Commissioner (Appeals) only. Thus assessee entertained a belief that as original assessment had been set aside, there was no necessity of challenging revisional order of Commissioner before Tribunal. Whether on facts, misconstruction of order of Commissioner by assessee and not filing an appeal against it within prescribed time was wrong but same could not be considered to be mala fide or with any ulterior purpose. Held, yes, Whether, therefore, a case for condonation of delay in filing appeal before Tribunal was made out. Held, yes." 6. Respectfully following the decision of the Coordinate Bench (supra), we condone the delay in filing the present appeals and all the appeals are admitted for adjudication on merit. 7. But for the amounts, the ground raised by the assessees is identical and common which is as follows: "The learned CIT, in the facts and circumstances of the case, is not justified in holding that the Assessing Officer has erred in not making the disallowance u/s. 40A(3) in respect of cash payments and, therefore, the order u/s. 263 is not valid." 8. Facts of the cases are that....
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....nts to labour, purchase of Sand, Gravel, Bricks, Cement etc., and submitted to you. All the above information is only on the basis of loose slips/notings on payments only. Because of this unorganized activities I have not maintained vouchers, Bills etc., since I could not kept them in my personal custody. During the course of survey on the basis of my assets acquired/available, disclosed the income and paid taxes as per the agreement with the department. In my line of business i.e., acquiring lands and development plotting them by providing facilities like Roads, Drainage system, Electrification & various tensions involved I cannot extract / provide the vouchers and bills. All the assets were disclosed and beyond that we do not acquire/hold. I request the Income tax Office to take the information submitted into consideration and complete the assessment. Since I have complied with my sworn deposition during the course of survey and subsequent proceedings, the above information may kindly be taken into account and complete the Assessment." 12. The Assessing Officer completed the assessment u/s. 143(3) of the Act accepting the income returned by respective assessee. 13. Th....
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....itted that the learned CIT took various amount in the sworn statements and considered them for disallowance u/s. 40A(3) which are not even purchases. For example, the table given by the CIT in page 2 of his order for A.Y. 2007-08 in the case of Smt. Gonugunta Suseela is as under: S. No. Date of payment Persons to whom the payment was made in excess of Rs. 20,000 Amount Paid (Rs.) 1. 15.04.2006 Challa rangaswamy 50,000 2. 14.09.2006 Purchase 35,200 Total 85,200 17. It was explained that the assessee has claimed only an amount of Rs. 35,200 as purchases in her statement whereas the other amount of Rs. 50,000 was taken from the cash-flow statement. These are advances received and advanced paid and not amounts of purchases so as to disallow u/s. 40A(3) of the Act. Likewise, in all other cases the amounts of purchases and other amounts considered by the learned CIT are listed as under: Name of the assessee A.Y. Purchases (Rs.) Advances (Rs.) Smt. Gonugunta Suseela 2009-10 - 16,00,000 Sri Upputuri Venkateswarlu 2007-08 4,10,040 - 2009-10 16,57,620 - Sri Gonugunta Venkateswarlu 2009-10 2,63,450 5,70,000 Sri Gonugunta Sr....
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....s are paid in violation of provisions of s. 40A(3). Without examining the payments in detail, we are of the opinion, the CIT came to a wrong conclusion that the assessees had violated the provisions of s. 40A(3). It is the case of survey and admittedly assessees had not maintained books of account. Therefore, the Assessing Officer asked for cash-flow statement and on the basis of such statements the assessees admitted income. Since the issue of purchases did not arise in the course of survey nor anything is identified that the assessees had paid any amount in violation of provisions of s. 40A(3), the Assessing Officer did not invoke the provisions of that section and accepted the admitted incomes. In view of this, we are of the opinion that the CIT without any basis on record invoked the provisions of s. 40A(3) and that too included certain amounts which cannot be disallowed u/s. 40A(3). Therefore, we are of the opinion that the orders of the CIT per se are not correct on facts. 23. In the case of CIT vs. Arvind Jewellers [259 ITR 502 (Guj)], the Gujarat High Court held that the finding of fact by the Tribunal was that the assessee had produced relevant material and had offered ....